Springboard / helping hand mortgages

LDN

This question sounds stupid already as I write it, so please forgive me, but does the helper have to be a different person to the homebuyer?

I came across the 'helping hand' type of mortgages the other day (where the helper's savings are ringfenced as a guarantee, but potentially returned in full after X amount of years - and with interest). I wondered if this might be a neat solution to couples with inequal deposits?

E.g. my OH and I put in 2.5% each, we own jointly, but a charge for 20% is held over my personal savings, enabling us to reach rates available to borrowers with 75% LTV rather than 95% LTV.

I guess the way around it would be for my parents to guarantee the 20% and me to in turn guarantee their 20%, but it then sounds messy, I understand loans and deposits don't mix, and I'd rather do this house malarkey without their help.

Thoughts welcomed. We want to buy in London, so the value of anything we buy is unlikely to drop.

PS In case you hadn't already guessed, we're a pair of [STRIKE]young professionals[/STRIKE] naive FTBs trying to find a way to buy without over-stretching. I'm pretty sure the banks will lend us lots of money, but the monthly repayments make me baulk. This just seemed like an option worth exploring.

Thrugelmir

Unequal deposits can be protected using a declaration of trust. Your solicitor will be able to advise you fully during the purchase process.

LDN

Thrugelmir wrote: »

Unequal deposits can be protected using a declaration of trust. Your solicitor will be able to advise you fully during the purchase process.

Thanks for your quick reply.

However, if we have a declaration of trust, I don't think it will feel an equal purchase, and that's what we're trying to achieve.

The way the market is going, I'm concerned if we wait for my OH to save more, we'll be completely priced out of the market here...

Do you (or anyone else) have any experience of this type of mortgage? I've already researched and dismissed shared ownership, springboard mortgages sound more interesting.

Thrugelmir

LDN wrote: »

However, if we have a declaration of trust, I don't think it will feel an equal purchase, and that's what we're trying to achieve.

What's the importance of an equal purchase to you? (Asking out of curiosity).

As an extreme example. If you were, as a couple, to default on the mortgage and end up in negative equity. So owing the lender money. Then your ring fenced savings would be called upon anyway.

Lizling

I used one of the Helping Hand mortgages, though for the more conventional reason of having only a 10% deposit and parents who wanted to help out, but not gift the deposit. All seems fine - first advisor I spoke to at lloyds didn't understand the product, got his maths wrong and the computer said no, but everything went smoothly when I spoke to someone more experienced at another branch. A year on, the London boom means I should be down to a 75% LTV by the time the fix is up, so I'll have totally skipped the higher rates I'd have paid with a 5% or 10% deposit, and my parents will have earned a 3% rate on their savings, which is better than their previous account.

amnblog

These helping hand/springboard deals are not designed for the arrangement you describe.